The Central Bank of the Russian Federation

September 12, 2014

Russian monetary officials decided to keep the key interest rate at 8.0% despite inflation of 7.7% versus a medium-term target of 4%.  The monetary policy rate had previously been raised by 150 basis points in March and 50 bps each in April and July.  A statement released today explains that elevated inflation stems from geopolitical tension, the West’s response of sanctions against Russia, other supply-side factors, and ruble depreciation caused by geopolitics and Russia’s isolation from the community of nations.  These factors are considered temporary.  “Weak” economic activity and the “current monetary policy stance will ensure deceleration of inflation to the target of 4% in the medium term,” so the statement asserts.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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